Question 1

Use the information below to answer the following question(s).
Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:
  
Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year's production.
-Calculate this year's operating income if the company plans to produce and sell 50,000 units.

Accepted Answer

A)  $50,000 
B)  $0 
C)  $ 
D)  $ 
E)  $250,000

Question 2

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost.
-utilities on the factory

Accepted Answer

A)  Cost pool - indirect factory operating costs 
B)  Cost pool - direct factory labour 
C)  Cost pool - indirect factory labour 
D)  Period cost

Question 3

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost.
-lubricants for machines

Accepted Answer

A)  Cost pool - indirect factory operating costs 
B)  Cost pool - direct factory labour 
C)  Cost pool - indirect factory labour 
D)  Period cost

Question 4

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost.
-utilities on the administrative building

Accepted Answer

A)  Cost pool - indirect factory operating costs 
B)  Cost pool - direct factory labour 
C)  Cost pool - indirect factory labour 
D)  Period cost

Question 5

Things are not going well for the widget industry this year. The well-known cyclical nature of widget sales is in a downturn and your plant has been ordered to cut costs by its American parent corporation. The plant manager explains that he has shown the lead by negotiating a $1.50 hourly wage decrease with the production workers, based on a formula that pegs a $1.50 per hour wage increase/decrease to sales volume, and since sales are down this year, so are hourly wage costs. In the quarterly management meeting, the sales manager complained that sales could have been higher, but that somehow costs had increased, at least that's what the reports out of your office in management accounting, indicated. The Purchasing manager assured everyone that she was able to obtain raw materials at the same price as last year, and unfortunately, you as the management accountant, were not in attendance at the meeting. Your assistant, a new employee attended in your place, and promised at the meeting to redo the reports and find the errors. Your assistant has come to you as he cannot find any errors in the reports. Consequently, the plant manager wants you to redo the reports, find the error reports produced by your department for the last quarter and to explain to your boss, the plant manager, why average costs have increased.
Required:
Assuming there are no errors in the cost reports, explain to the plant manager how direct labour costs could be decreased and direct materials costs could be the same as last year, and yet the selling price cannot be lowered without sacrificing net income for the plant.

Accepted Answer

The answer of Things are not going well for the...

Question 6

Boone Hospital wants to determine, to the extent possible, the actual cost for each patient stay. It is a general health care facility with all basic services but does not perform specialized services such as organ transplants.
Required:
Complete the following table by
a. Classifying each cost as a direct or indirect cost with respect to each patient.
b. Classifying each item as fixed or variable with respect to the number of patient days (sum of days each patient was in hospital) the hospital incurs.

Accepted Answer

The answer of Boone Hospital wants to determine, to the...

Question 7

Evans Inc., had the following activities during 2015:

Required:
a. What is the cost of direct materials used during 2015?
b. What is cost of goods manufactured for 2015?
c. What is cost of goods sold for 2015?
Assume that Evans uses a two-part classification system for prime and conversion costs.
d. What amount of prime costs was added to production during 2015?
e. What amount of conversion costs was added to production during 2015?

Accepted Answer

The answer of Evans Inc., had the following activities during...

Question 8

Messinger Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted:

Required:
a. Prepare a cost of goods manufactured schedule for the quarter.
b. Prepare a cost of goods sold schedule for the quarter.

Accepted Answer

The answer of Messinger Manufacturing Company had the following account...

Question 9

Eichhorn Company's Process Engineering department has the responsibility of rearranging the individual work tasks for each assembly line worker, with the goal of utilizing each worker as much as possible. Currently, on average, each assembly line worker only has tasks that require 47 minutes per hour, and the plant manager wants this increased by at least 10 %. The company builds the Eichhorn Rocket Roadster, which is selling out of dealers' showrooms faster than the company's assembly plants can produce them. If production can't be increased, then sales will soon suffer.
Required:
Explain the effect on total costs of production, using the number of engineering changes (from Process Engineering) and at least two other cost drivers. Choose the cost driver that you think is most logical in the circumstances, and begin your answer with a brief explanation of a cost driver.

Accepted Answer

The answer of Eichhorn Company's Process Engineering department has the...

Question 10

Springfield Manufacturing produces electronic storage devices, and uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs for January were $300 million, and were allocated to each product on the basis of direct manufacturing labour costs of each line. Summary data for January for the most popular electronic storage device, the Big Bertha, was:
  
Required:
a. Compute the total manufacturing cost per unit for each product produced in January.
b. Suppose production will be reduced to 30,000 units in February. If indirect manufacturing costs include fixed costs then explain if the total cost per unit be higher or lower than in January.

Accepted Answer

The answer of Springfield Manufacturing produces electronic storage devices, and...

Question 11

Ames Power Point had sales in October of $28,000,000 for its three stores in Toronto. The beginning merchandise inventories for October and November were $5,000,000 and $4,000,000, respectively. October purchases totalled $19,000,000. All sales are on account (terms 2/15, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken for a total of $265,000. September sales totalled $25,000,000 while November sales were $30,000,000. Additional information for October is as follows:

Required:
Using an appropriately formatted income statement, determine the operating income of the company.

Accepted Answer

The answer of Ames Power Point had sales in October...

Question 12

Use the information below to answer the following question(s).
Ontario Industries Inc. had the following activities during the year:
 
-What is the amount of direct materials used by Ontario Industries Inc.?

Accepted Answer

A)  $168,000 
B)  $165,000 
C)  $173,000 
D)  $205,000 
E)  $170,000

Question 13

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost.
-factory worker overtime premiums

Accepted Answer

A)  Cost pool - indirect factory operating costs 
B)  Cost pool - direct factory labour 
C)  Cost pool - indirect factory labour 
D)  Period cost

Question 14

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost.
-night security

Accepted Answer

A)  Cost pool - indirect factory operating costs 
B)  Cost pool - direct factory labour 
C)  Cost pool - indirect factory labour 
D)  Period cost

Question 15

Eschliman Manufacturing Company had the following account balances for the quarter ending September 30, unless otherwise noted:

Required:
a. Prepare a cost of goods manufactured schedule for the quarter.
b. Prepare a cost of goods sold schedule for the quarter.

Accepted Answer

The answer of Eschliman Manufacturing Company had the following account...

Question 16

Christi Manufacturing provided the following information for last month:

If sales double next month, what is the projected operating income?

Accepted Answer

A)  $4,000 
B)  $7,000 
C)  $9,000 
D)  $12,000 
E)  $6,000

Question 17

Combs, Inc., reports the following information for September:

Required:
If sales double in October, what is the projected operating income?

Accepted Answer

The answer of Combs, Inc., reports the following information for...

Question 18

Use the information below to answer the following question(s).
Frazer Inc. had the following activities in the year:
 
-What is Frazer's cost of goods manufactured?

Accepted Answer

A)  $536,000 
B)  $496,000 
C)  $480,000 
D)  $476,000 
E)  $512,000

Question 19

Use the information below to answer the following question(s).
Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:
  
Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year's production.
-Calculate last year's operating income when the company produced and sold 40,000 units.

Accepted Answer

A)  $0 
B)  $ 
C)  $ 
D)  $ 
E)  $

Question 20

Use the information below to answer the following question(s).
Ontario Industries Inc. had the following activities during the year:
 
-What is the amount of the beginning work-in-process inventory at Ontario Industries Inc.?

Accepted Answer

A)  $1,000 
B)  $5,000 
C)  $12,000 
D)  $6,000 
E)  $4,000

Exam 2: An Introduction to Cost Terms and Purposes

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost. -utilities on the factory

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost. -lubricants for machines

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost. -utilities on the administrative building

Messinger Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted: Required: a. Prepare a cost of goods manufactured schedule for the quarter. b. Prepare a cost of goods sold schedule for the quarter.

Use the information below to answer the following question(s) . Ontario Industries Inc. had the following activities during the year: -What is the amount of direct materials used by Ontario Industries Inc.?

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost. -factory worker overtime premiums

Sheen Manufacturing has four manufacturing cost pools and many types of costs, some of which ar e listed below. Match the type of cost with the most appropriate cost pool or as a period cost. -night security

Eschliman Manufacturing Company had the following account balances for the quarter ending September 30, unless otherwise noted: Required: a. Prepare a cost of goods manufactured schedule for the quarter. b. Prepare a cost of goods sold schedule for the quarter.

Christi Manufacturing provided the following information for last month: If sales double next month, what is the projected operating income?

Combs, Inc., reports the following information for September: Required: If sales double in October, what is the projected operating income?

Use the information below to answer the following question(s) . Frazer Inc. had the following activities in the year: -What is Frazer's cost of goods manufactured?

Use the information below to answer the following question(s) . Ontario Industries Inc. had the following activities during the year: -What is the amount of the beginning work-in-process inventory at Ontario Industries Inc.?